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Tuesday, December 9, 2014

whether in the absence of any prayer made in the complaint and without evidence of any loss suffered, the award of punitive damages was permissible. = Neither there is any averment in the complaint about the suffering of punitive damages by the other consumers nor the appellant was aware that any such claim is to be met by it. Normally, punitive damages are awarded against a conscious wrong doing unrelated to the actual loss suffered. Such a claim has to be specially pleaded.-The National Commission in exercise of revisional jurisdiction was only concerned about the correctness or otherwise of the order of the State Commission setting aside the relief given by the District Forum and to pass such order as the State Commission ought to have passed. However, the National Commission has gone much beyond its jurisdiction in awarding the relief which was neither sought in the complaint nor before the State Commission. We are thus, of the view that to this extent the order of the National Commission cannot be sustained. = 2014- Oct. Part - CIVIL APPEAL NOS. 8072-8073 OF 2009 GENERAL MOTORS (INDIA) PRIVATE LIMITED ..... APPELLANT VERSUS ASHOK RAMNIK LAL TOLAT & ANR. ..... RESPONDENTS

REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 8072-8073 OF 2009

GENERAL MOTORS (INDIA) PRIVATE LIMITED ..... APPELLANT

VERSUS

ASHOK RAMNIK LAL TOLAT & ANR. ..... RESPONDENTS

J U D G M E N T

ADARSH KUMAR GOEL, J.

1. These appeals have been preferred against the order
dated 16th December, 2008 of the National Consumer Disputes Redressal
Commission (for short “the National Commission”) in Revision Petition
Nos.3349 of 2006 and 2858 of 2008.
2. The main question raised in these appeals is whether in the absence
of any prayer made in the complaint and without evidence of any loss
suffered, the award of punitive damages was permissible. Apart from the
said main question, the appellant has also called in question the refund
ordered and other relief granted in favour of the respondent-complainant.
3. In the complaint, filed before the District Forum, Ahmedabad (Rural)
(for short “the District Forum”), the prayer of the respondent-complainant
was as follows :

“The complainant, therefore, most respectfully prays :

That this Hon’ble Forum be pleased to hold that the opposite parties
(joint and severally) to have practiced unfair trade practice, towards the
complainant and direct them (jointly and severally) to remove unfair trade
practice, practiced by them against the complainant;

This Hon’ble Forum be pleased to direct the opposite parties (jointly and
severally) to remove the deficiencies in their services and negligence
towards the complainant.

This Hon’ble Forum be pleased to direct the opposite parties (jointly
and severally) to refund the complainant a sum of Rs.14,00,000/- (Rupees
Fourteen Lakh) and Rs.1,91,295/- to the complainant along with the 18%
interest, from the date of payment to the complainant and the Hon’ble Forum
be pleased to direct the opposite parties to forthwith to take back the
said vehicle from the complainant, after refunding the complainant’s money
with interest, as prayed;

This Hon’ble Forum be pleased to direct the opposite parties (jointly and
severally) to pay compensation for physical and mental pain, shock,
suffering, agonies, hardships, inconveniences and expenses suffered by the
complainant, to the tune of Rs.50,000/- (Rupees Fifty Thousand) or as
thought fit in the interest of justice, by this Hon’ble Forum;

The Hon’ble Forum be pleased to direct the opposite parties (jointly
and serverally) to pay Rs.25,000/- to the complainant, as cost of this
complaint.”

4. The case of the complainant is that he had passion for driving and
dream to visit Leh Ladakh, Jammu & Kashmir and Nepal by driving a motor
car. By surfing the internet, he read advertisement given by the
appellant as follows :
“Introducing a world without borders, an SUV to end all SUVs. That’s the
new Chevrolet Forester. With the Power of 120 horses under its borne
unique All-Wheels (AWD), it literally puts the four corners of the earth
within your easy reach. It won’t just get you there. But get you there.
But get you there in unmatched comfort and luxury by-road, off-road or no-
road.”

5. Relying upon the same, he visited the agents of the appellant and was
given a book titled “for a special journey called life”. He was assured
that the vehicle offered for sale will realise his dream. The brochure
also assured that “the vehicle in question is an SUV to end all SUVs. And
…………… it will put the four corners of the earth within your each and ………..
it won’t just get you their every time. But get you’re there in unmatched
comfort, by road, off-road or no road”. He was also shown visual
presentation of the vehicle and was also given a copy of the VCD.
Accordingly, he purchased the vehicle on 1st May, 2004 for Rs.14 Lakhs and
got accessories worth Rs.1,91,295/- fitted and also got the vehicle insured
and registered.
6. Thereafter he realised that the vehicle was not fit for “off-road, no
road and dirt road” driving as represented and had defects. Accordingly,
he approached the appellant and its dealers who referred to the owner’s
manual at pages 8-6 column 1 & 3 printed by the Company to the effect :
“off-road driving ………… But please keep in mind that AWD Chevrolet is a
passenger car and is neither a conventional off-road vehicle nor an all
terrain vehicle …….. If the driving through water such as when crossing
shallow streams, first check the depth of the water and the water stream
bed for firmness and ensure that the bed of stream is flat ………… the water
should be shallow enough that it does not reach under carriage.”

Thus he found that the owner’s manual was contrary to the assurance
in the brochure, internet and the book titled “for a special journey called
life”. He also realised that the vehicle was not SUV but a mere passenger
car, not fit for “off-road, no road and dirt road” driving. He could not
realise his dream to drive it to Leh Ladakh, Jammu & Kashmir and Nepal.
The action of the appellant was thus, “unfair trade practice”. He sought
permission to remove “unfair trade practice” and deficiencies in service
and also to refund a sum of Rs.14 Lakhs the price of the vehicle and
Rs.1,91,295/- the price of accessories with 18% interest from the date of
purchase till the date of payment and also to pay compensation for physical
and mental pain shock, suffering, agonies, hardships, inconvenience and
expenses suffered by the complainant, to the tune of Rs.50,000/- or as
thought fit in the interest of justice and the costs. The District Forum
directed refund of Rs.14 Lakhs plus Rs.1,91,295/- towards cost of
accessories with interest @ 9% per annum from the date of complaint to the
date of payment subject to the return of the vehicle, apart from
compensation of Rs.5,000/- for mental agony and Rs.2,000/- as costs of
litigation.
7. The said order of the District Forum was challenged by the appellant
before the Consumer Disputes Redressal Commission, Gujarat State, Ahmedabad
(for short “the State Commission”). The State Commission held that the
vehicle had no mechanical or manufacturing defect but the advertisement
that car was SUV amounted to “unfair trade practice”. Accordingly, in
substitution of the order of the District Forum, the complainant was held
entitled to Rs.50,000/- as compensation which included costs of
litigation. But at the same time, the complainant was required to pay
Rs.5,000/- towards costs for undeserving claim. The appellant was directed
not to describe the vehicle in question as SUV in any form of
advertisement, website, literature etc. and to make the correction that it
is a passenger car as mentioned in the manual.
8. Accordingly, the appellant complied with the said direction by
issuing a disclaimer.
9. The respondent preferred a revision petition against the Order of the
State Commission while the appellant filed a cross revision petition.
10. The National Commission held that the appellant could not be allowed
to contest the finding of committing “unfair trade practice” in view of its
conduct in voluntarily complying with the order of the State Commission and
filing cross revision without any justification and belatedly. Referring
to the material on record, particularly, the undisputed correspondence, the
said finding was also affirmed on merits. After referring to the
definition of “unfair trade practice” under Section 2(1) (r) of the
Consumer Protection Act, 1986 (for short “the Act”), it was concluded :
“Keeping in view the above definition of unfair trade practice and the
material obtaining on record more particularly the representations made and
held out by the respondent in their brochures relating to the vehicle in
question, the owner’s manual as also the clarification rendered by the
manufacturer of the vehicle, there can be hardly any doubt that the motor
vehicle Chevrolet forester AWD model was not a vehicle of the said
description in as much as it was not a SUV vehicle. Therefore, the
petitioner must have been misled on that score to believe that the vehicle
offered for sale was a SUV. This act of the respondent would clearly fall
within the mischief of unfair trade practice as envisaged in section 2(r)
(supra). We therefore, affirm the findings of the State Commission in
this behalf.”

11. After recording the above finding the National Commission proceeded
to consider the relief to be given. It was held that the State Commission
was not justified in reversing the direction of the District Forum once the
commission of “unfair trade practice” was established, even as per finding
of the State Commission. Accordingly, the National Commission restored
the relief given by the District Forum with slight modification as follows
:
“Once it is found that respondent has indulged in unfair trade practice
which had misled the petitioner to purchase the vehicle in question, in our
view, the most appropriate relief to the petitioner would be to reinstate
the petitioner to his original position before the purchase of the vehicle
viz., refund of the price of the vehicle along with some compensation in
that behalf. Keeping in view that the vehicle was used by the petitioner
for a period of about one year and it has run approximately 14,000 kms, we
consider it appropriate that the respondent should refund a sum of
Rs.12,50,000 (Rupees twelve lacs fifty thousand only) to the petitioner
subject to the condition that the vehicle in question, without the
accessories, which the petitioner got fixed at a cost of Rs.1,91,295/-, is
returned to the respondent.”

12. The above was not the end of the journey, though the above relief met
the claim of the complainant in his complaint. The National Commission
proceeded to consider the issue of punitive damages for “unfair trade
practice” in selling the said vehicles to about 260 consumers. It was held
that though the consumers had not approached the National Commission and a
period of four years had passed, the appellant should pay punitive damages
of Rs.25 lakhs and out of the said amount, a sum of Rs.5 Lakhs be paid to
the complainant while the rest be deposited in the “Consumer Welfare Fund”
of the Central Government to be utilized for the benefit and protection of
the interests of the consumers generally. Final operative order passed by
the National Commission is as follows :
“The respondents are hereby directed to pay a sum of Rs.12,50,000/- (Rupees
Twelve Lacs Fifty Thousand only) to the petitioner towards price of the
vehicle subject to the petitioner returning the vehicle in question without
accessories to the respondents. The respondents are hereby called upon to
deposit a sum of Rs.25 lacs (Rupess Twenty Five Lacs) as punitive damages
with this Commission. Out of the said deposited amount, a sum of Rs.5 lacs
(rupees five lacs) shall be paid to the petitioner-complainant and rest of
the amount shall be credited to the “Consumer Welfare Fund” of the Central
Government to be utilized for the benefit and protection of the interests
of the consumers generally. We also award a sum of Rs.50,000/- (rupees
fifty thousand) in favour of the complainant to meet his cost of litigation
before the three consumer fora. The liability to pay and deposit the
amounts shall be joint and several on the respondents. We grant six weeks
to the respondents to comply with the directions given herein above. ”

13. We have heard learned counsel for the appellant and the respondent
No.1-complainant in-person and perused the record.
14. The concurrent finding recorded by the District Forum, the State
Commission and the National Commission to the effect that “unfair trade
practice” was committed by the appellant which is based on adequate
material on record, does not call for any interference by this Court and
the same is affirmed .
15. What survives for consideration is the submission of learned senior
counsel for the appellant, that there was no claim before the National
Commission for the punitive damages nor the appellant had an opportunity to
meet such claim and that part of the order needs to be set aside.
16. We find merit in this submission. Vide interim order of this Court
dated 17th July, 2009, the operation of the impugned order awarding
punitive damages was stayed. Learned counsel for the appellant undertook
to deposit the amount awarded in favour of the respondent-complainant
towards his claim. The said order was allowed to continue, vide order
dated 20.11.2009, with the following modifications :

“(i) Respondent No.1 shall return the vehicle to the appellant within a
period of four weeks from today. The latter shall arrange for accepting
delivery of the vehicle at Ahmedabad.

(ii) After return of the vehicle to the appellant, respondent No.1 shall
be entitled to withdraw the amount of Rs.12,50,000/- together with
litigation cost deposited by the appellant before the District Forum in
terms of order of this Court dated 17th July, 2009 subject to his
furnishing security to the satisfaction of the District Forum.

(iii) It will be open to the appellant to sell the vehicle and keep the
sale proceeds in a separate interest bearing account. Respondent No.1
shall cooperate with the appellant by signing the documents necessary for
selling the vehicle.”

17. We proceed to deal with the issue of correctness of finding recorded
by National Commission for awarding punitive damages. Before doing so, we
may notice that the respondent-complainant appearing in-person, in his
written submissions has raised various questions, including the question
that the appellant should be asked to account for the proceeds of the
vehicles sold by it. Admittedly, the vehicle in question has been ordered
to be handed back to the appellant against which respondent-complainant has
no claim. Thus, the plea raised is without any merit. The other issue
raised for further punitive damages of Rs.100 crores and also damages for
dragging him in this Court, merits no consideration being beyond the claim
of the complainant in the complaint filed by him. Moreover, no litigant
can be punished by way of punitive damages for merely approaching this
Court, unless its case is found to be frivolous.
18. The Act is a piece of social legislation to provide a forum to the
consumers who are taken for a ride by suppliers of goods and services. The
redress is provided to a consumer against any deficiency in service as well
as against any loss or injury arising out of “unfair trade practice”. By
later amendment, scope of a complaint can cover not only individual
consumer but also consumers who are not identifiable conveniently.
However, the complainant has to make an averment and make a claim. Section
12 of the Act permits not only a complaint by a consumer to whom goods are
sold or delivered but also any recognised consumer association or one or
more consumers on behalf of and for the benefit of all consumers but still,
a case has to be made out and the affected party heard on such issue. We
are conscious that having regard to the laudable object of the social
legislation to protect the interest of consumers, liberal and purposive
interpretation has to be placed on the scheme of the Act avoiding hyper
technical approach. At the same time, fair procedure is hall mark of
every legal proceeding and an affected party is entitled to be put to
notice of the claim with such affected party has to meet.
19. We may at this stage refer to the scheme of the Act with regard to
claim against “unfair trade practice”. The background and scope of the
provision was dealt with in Ludhiana Improvement Trust v. Shakti Coop.
House Building Society Ltd.[1] as follows :

“18. Prior to the substitution of clause (r) in sub-section (1) of Section
2 of he Act with retrospective effect from 18-6-1993, there was no separate
definition of the term “unfair trade practice” and the said term was given
the same meaning as in Section 36-A of the Monopolies and Restrictive Trade
Practices Act, 1969 (for short “the MRTP Act”). But now after the said
amendment, the definition of the term has been specifically provided in
Section 2(1)(r), although the definition is practically a verbatim
reproduction of the definition in Section 36-A of the MRTP Act.

19. The basic ingredients of “unfair trade practice” are:

(i) it must be a trade practice;

(ii) the trade practice must be employed for the purpose of promoting
the sale, use or supply of any goods or for the provision of any service;
and

(iii) the trade practice adopts any unfair method or unfair or
deceptive practice including any of the practices enumerated in clauses (1)
to (6) of Section 2(1)(r) of the Act.

Therefore, any trade practice which is adopted for the purpose of promoting
the sale, use or supply of any goods or for the provision of any service,
by adopting any unfair method or unfair or deceptive practice has to be
treated as “unfair trade practice” for which an action under the provisions
of the Act would lie, provided, the complainant is able to establish that
he is a consumer within the meaning of Section 2(1)(d) of the Act.”

In Colgate Palmolive (India) Ltd. v. MRTP Commission[2] this Court laid
down five ingredients which have to be established before a trade practice
can be said to be an “unfair trade practice”. The Court laid the
ingredients in the following manner:

“16. A bare perusal of the aforementioned provision would clearly indicate
that the following five ingredients are necessary to constitute an unfair
trade practice:

1. There must be a trade practice [within the meaning of Section 2(u) of
the Monopolies and Restrictive Trade Practices Act].

2. The trade practice must be employed for the purpose of promoting the
sale, use or supply of any goods or the provision of any services.

3. The trade practice should fall within the ambit of one or more of the
categories enumerated in clauses (1) to (5) of Section 36-A.

4. The trade practice should cause loss or injury to the consumers of
goods or services.

5. The trade practice under clause (1) should involve making a
‘statement’ whether orally or in writing or by visible representation.”

Again in Godfrey Phillips India Ltd. v. Ajay Kumar[3], it was
observed :
“18. So far as Direction (iii) is concerned, it is to be noted that there
was no prayer for any compensation. There was no allegation that the
complainant had suffered any loss. Compensation can be granted only in
terms of Section 14(1)(d) of the Act. Clause (d) contemplates award of
compensation to the consumer for any loss or injury suffered due to
negligence of the opposite party. In the present case there was no
allegation or material placed on record to show negligence.”

Thus, mere proof of “unfair trade practice” is not enough for claim
or award of relief unless causing of loss is also established which in the
present case has not been established.
20. We have already set out the relief sought in the complaint. Neither
there is any averment in the complaint about the suffering of punitive
damages by the other consumers nor the appellant was aware that any such
claim is to be met by it. Normally, punitive damages are awarded against a
conscious wrong doing unrelated to the actual loss suffered. Such a claim
has to be specially pleaded. The respondent complainant was satisfied
with the order of the District Forum and did not approach the State
Commission. He only approached the National Commission after the State
Commission set aside the relief granted by the District Forum. The
National Commission in exercise of revisional jurisdiction was only
concerned about the correctness or otherwise of the order of the State
Commission setting aside the relief given by the District Forum and to pass
such order as the State Commission ought to have passed. However, the
National Commission has gone much beyond its jurisdiction in awarding the
relief which was neither sought in the complaint nor before the State
Commission. We are thus, of the view that to this extent the order of the
National Commission cannot be sustained. We make it clear that we have not
gone into the merits of the direction but the aspect that in absence of
such a claim being before the National Commission and the appellant having
no notice of such a claim, the said order is contrary to principles of fair
procedure and natural justice. We also make it clear that this order will
not stand in the way of any aggrieved party raising a claim before an
appropriate forum in accordance with law.
21. Accordingly we allow these appeals and set aside the order of the
National Commission to the extent of award of punitive damages.

……..…………………………….J.
[ V. GOPALA GOWDA ]

.….………………………………..J.
NEW DELHI [ ADARSH KUMAR GOEL ]
October 9, 2014

ITEM NO.1A-For Judgment COURT NO.13 SECTION XVII

S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS

Civil Appeal No(s). 8072-8073/2009

GENERAL MOTORS (I) PRIVATE LIMITED Appellant(s)

VERSUS

ASHOK RAMNIK LAL TOLAT & ANR. Respondent(s)

Date : 09/10/2014 These appeals were called on for JUDGMENT today.

For Appellant(s) Mr. Vikram Shokalia, Adv.
For M/s. Dua Associates

For Respondent(s)
Caveator-in-person

Ms. Aparna Jha,Adv.

Hon'ble Mr. Justice Adarsh Kumar Goel pronounced the judgment
of the Bench comprising His Lordship and Hon'ble Mr. Justice V.Gopala
Gowda.
The appeals are allowed in terms of the signed order.